Expedia Group, Inc.

Good day everyone and welcome to the Expedia Group Q3 2024 financial results teleconference. My name is Alex and I'll be the operator for today's call. If you wish to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two to cancel your request. For opening remarks, I will turn the call over to SVP Corporate Development Strategy and Investigations Harsha Vaish. Please go ahead.

Good afternoon, and welcome to Expedia Group's third quarter 2024 earnings call. I am pleased to be joined on today's call by our CEO, Ariane Gorin, and our CFO, Julie Whelan. As a reminder, our commentary today will include references to certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in our earnings release. And unless otherwise stated, any reference to expenses excludes stock-based compensation. We will also be making forward-looking statements during the call, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions, which are subject to risks and uncertainties that are difficult to predict. Actual results could materially differ due to factors discussed during this call and in our most recent forms 10-K, 10-Q, and other filings with the SEC. Except as required by law, we do not undertake any responsibility to update these forward-looking statements. Our earnings release, SEC filings, and the replay of today's call can be found on our investor relations website at ir.expediagroup.com. And with that, let me turn the call over to Ariane.

Thanks, Harshit, and thank you all for joining us today. Our third quarter results reflect strong execution across our company. We exceeded our expectations on gross bookings and earnings, with revenue landing in line despite weather and currency headwinds. We accelerated gross bookings in our consumer business for the second straight quarter, driven by continued strength in brand Expedia, Vrbo returning to growth, and good results in our international points of sale. Our advertising and B2B businesses continue to outpace the industry, both delivering strong double-digit growth. We remain disciplined on costs, with cost of sales and overheads both declining year over year. Overall, We're pleased with the results of our work. We're executing in what's in our control and capitalizing on growth opportunities to rebuild momentum after our tech replatforming. The travel environment in the third quarter was healthy but mixed, with demand softer in July and then improving into August and September. International demand was stronger than the U.S., and compared to last year, booked room nights grew in the low single digits in the U.S., low double digits in Europe, and high teams in the rest of the world. Like last quarter, prices held up for both hotel and vacation rentals. For air and car, we saw continued pricing pressure, though air ticket prices grew in September for the first time this year. Turning to our consumer business, we remain focused on the fundamentals, driving more direct traffic, improving product performance, enhancing our supply, and expanding internationally. Gross bookings were up 3% year-on-year, which was a two-point acceleration compared to the second quarter. Global app downloads for our core brands was up nearly 10% year-on-year, led by EMEA at 20% growth. And the percent of bookings coming from our apps improved by three points. Brand Expedia continued to be strong, with room nights at mid-teens year-on-year. We shipped great new product features like destination comparison, flexible date search, and live flight tracker, all of which create better traveler experiences. Our package product that allows travelers to dynamically bundle a huge selection of flights, hotels, and cars, all with attractive package savings, is a real differentiator for Brand Expedia. Last quarter, we released new features like the ability to book accommodations for only part of the trip and package searches for one-way flights. These make planning and booking multi-item trips even easier and combined with our targeted promotional activity drove a 25% increase in package bookings in the third quarter. Shifting to Vrbo now, we delivered our first full quarter of bookings growth this year. Bookings were up modestly with traffic and conversion both growing despite the negative impact of Hurricane Helene. We're meaningfully improving Vrbo app performance, making the app faster and adding new features to streamline shopping. App traffic growth has accelerated, and more visitors are signing in. We've also further strengthened Vrbo's supply. We added nearly 1 million units that had previously only been available on brand Expedia. These units skew more to urban areas and shorter stays, which allows Vrbo to appeal to a wider audience. And beyond the additional supply, we improved the quality of our existing supply. with more discounts for long stays and more flexible cancellation policies. Looking to the fourth quarter, while October's been tougher for Vrbo due to Hurricane Milton, we believe that our focus on the basics, traffic, our product, and our supply, will continue to drive positive momentum for Vrbo. Before moving to B2B, I want to highlight progress from our international expansion, advertising, and loyalty initiatives. In the last few quarters, we've moved back into faster-growing international markets, investing surgically, and are seeing promising results. Bookings growth for our consumer brands outside the U.S. accelerated by five points in the third quarter. One particular highlight was healthy double-digit growth for Hotels.com in Scandinavia, where we already have high brand awareness. We believe we have a big opportunity ahead to grow internationally and to win share. Our advertising business delivered yet another strong quarter with revenue up 32% as we've continued to add more advertisers and evolve our products. We simplified our signup process and are testing new product capabilities like video ads and search results, which are driving a nearly 30% increase in engagement. All of this means we're delivering more value and better returns for our advertisers. In terms of our loyalty program, Global active membership grew 7% year-over-year in Q3, and our 12-month member repeat rate was up 150 basis points compared to last year. On our three core brands, nearly half of our roommates nights came from silver, gold, or platinum members. And as a reminder, these higher tier members get further member discounts funded by our supply partners. We've also enhanced the one key value proposition in the US and UK. This quarter, we introduced member-only discounts for the first time ever on Vrbo and have seen great early results. And on brand Expedia, we just expanded redemption options to include more airlines. We're continuing to fine-tune the loyalty value proposition for each brand and each market while capitalizing on the capabilities of our underlying tech platform. Turning to B2B, we had another strong quarter, with bookings up 19% year-on-year, slowing only one point from the second quarter. Growth was broad-based and came from all partner segments and regions. We shipped new solutions for existing partners, adding activities and ground transport for hotel partners like Hilton, and introducing new loyalty capabilities for Alaska Airlines. We also secured important wins, like long-term renewals with Despigar and Traveloka, and a new partnership with Canadian bank CIBC. Just last week, we announced a new partnership with Microsoft Bing. So overall, we continue to extend our leadership in B2B. Let me now spend a minute on a few highlights of how our tech platform and AI capabilities are contributing to better conversion and enhanced customer service. On conversion, some of the most compelling use cases so far have been property question and answer, smart and natural language filters, and review summaries. Over 70% of travelers read reviews before making a booking, and we use generative AI to efficiently summarize reviews and provide detailed property and neighborhood information. This makes it easier for travelers to shop while taking less of our development time and resources. In customer service, we're continuing to leverage AI to allow travelers to self-serve which both lowers costs and improves the traveler experience. For instance, our virtual agents now handle nearly half of all traveler inquiries through self-service. Additionally, our agent co-pilot feature, which summarizes voice and chat interactions, significantly reduces after-call work for our call center agents. Before closing, I want to share a couple of leadership updates. We announced today that Julie will be stepping down as CFO and as a member of our board of directors. We expect to announce a successor prior to Julie's departure to allow for a smooth transition. I want to thank Julie for all she's done for Expedia Group as a board member and as our CFO over the last five years. We're deeply grateful for all of her contributions and appreciate her partnership during this transition. We also announced last month that Raman Atumu is joining us as our Chief Technology Officer. Raman is a great leader and technologist, and he's led tech teams for over two decades. More recently, he built and scaled the multi-brand platform at Fanatics, so his experience is directly relevant to our growth aspirations here at Expedia Group. In closing, we're pleased with our third quarter performance and the progress we're making. We continue to see healthy travel demand and are confident in our ability to execute, which has led us to raise our full-year guidance, and Julie will talk about that in a minute. I'd like to thank our team for their hard work and the successful delivery of our third quarter. With that, let me hand it over to Julie.